Players adopted a cautious approach on Friday as they are keenly monitoring the fresh developments on the US-Iraq war front.

The BSE Sensex was range-bound after a total 108-point surge in the last two sessions.

By the first half of the session today, the Sensex moved in a band of just 16 points - touching a high of 3,196 and a low of 3,180.

However, in the absence of any adverse development on the war front so far, follow-up buying support continued for select pivotals and side counters in sectors like IT, banking, steel, media etc. Select public sector undertaking (PSU) stocks like Neyveli Lignite (up 2.8% at Rs 27.15), RCF (up 1.5% at Rs 13.80), Shipping Corporation of India (up 1.4% at Rs 57), Bharat Electronics (up 1.1% at Rs 193), Bharat Earth Movers (up 1.5% at Rs 63.60) and HPCL (up 1.5% at Rs 305) advanced.

Among pivotals, Dr. Reddy's Laboratories (up 2.7% at Rs 907.55), Zee Telefilms (up 2.6% at Rs 75.90), State Bank of India (up 1% at Rs 284.85), Tisco (up 0.6% at Rs 140.20), Hindustan Lever (up 0.4% at Rs 161.20) posted gains.

The top gainers among side counters were Padmalaya Telefilms (up 7.5% at Rs 64.60), Thirumalai Chemicals (up 7.3% at Rs 39.70), Balaji Telefilms (up 4.7% at Rs 62), Hexaware Technologies (up 5.3% at Rs 116.50), Ceat (up 4.4% at Rs 27), SSI (up 4.2% at Rs 71.80), NIIT (up 3.8% at Rs 116) and Sesa Goa (up 3.3% at Rs 65.80).

Soon after the war began in the wee hours of Iraqi time on Thursday, the market bounced back on expectations that the armed confrontation will be short and swift. The Sensex surged by 71.75 points, or 2.3%, to settle at 3,192.93. The S&P CNX Nifty gained 21.35 points, or 2.1%. In the last two sessions (on Wednesday and Thursday), the Sensex has gained 108 points.

The rally was primarily on the back of hopes that the US-Iraq war may end in 3-7 days. Global markets also staged a recovery in the last few sessions on similar expectations.

However, the fact that market men are cautious is evident from their activity in the derivatives segment, where there is an increasing focus on options. Dealers said that players are increasingly hedging their positions. “No body is taking a naked position in futures at present,” said a derivatives dealer.

Dealers said the future course of the market will depend on the developments on the war front. Meanwhile,US forces streamed across Iraq's southern desert today, aiming for Baghdad, with no reports of resistance so far.

Dealers said that if the war gets prolonged, the market may once again lose ground, givens the fact that the market has surged in recent sessions on hopes of a short and swift war. They feel that still there are a number of uncertainties like the duration of the war, likely use of chemical weapons and setting of oil wells ablaze by Iraq.

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